Fitch Ratings Ltd yesterday revised downward its global economic growth forecast to 2 percent for this year, from the 2.1 percent growth it estimated in July, citing the economic contraction in some European counties and Japan as well as the weaker than expected growth in emerging countries such as Brazil and India in the third quarter.
In the ratings agency’s latest quarterly report, Global Economic Outlook, Fitch also cut its growth forecast for the world economy to 2.4 percent next year, from the previous 2.6 percent forecast, and lowered the estimate to 2.9 percent for 2014, compared with 3 percent it predicted in July.
Fitch’s global forecast came after the IMF in its biannual World Economic Outlook report released in October cut its growth forecasts for the global economy to 3.3 percent for this year and 3.6 percent for next year, from 3.5 percent and 3.9 percent estimated in July respectively.
Despite headwinds slowing the macroeconomic situation, Credit Suisse Group AG yesterday forecast that global growth for next year would likely accelerate modestly to be close to its 20-year norm, at 3.4 percent, in purchasing-power parity (PPP) terms.
“We think global GDP growth will accelerate modestly from the current growth rate of slightly below 3 percent to around 3.2 percent – 3.4 percent in 2013,” a group of strategists and analysts at Credit Suisse led by Andrew Garthwaite wrote in a note.
With the economic and financial rebalancing in the eurozone proving longer and harder than anticipated despite the European Central Bank’s (ECB) bond-buying program, and the near-term growth outlook of the US economy complicated by the effect of superstorm Sandy and the looming fiscal cliff, Fitch said the global outlook was “insipid and fragile.”
“Global growth outturns are continuing to undershoot expectations and risk remain skewed to the downside,” Gergely Kiss, director of Fitch’s sovereign team, said in a statement.
Emerging markets are expected to face growing challenges amid weak import demand from advanced economies and domestic vulnerabilities, which have led to a soft patch in Brazil and India this year, the agency said.
Moreover, as China’s role in the global economy has grown rapidly over the past decade, Fitch said the global repercussions of a hypothetical hard landing of the Chinese economy would slow global growth significantly.
While saying that a hard landing in China is just a scenario and not its base case, Fitch’s report showed a hypothetical hard landing that resulted in a cumulative loss of 4 percentage points of Chinese GDP in two years would slow global growth by 1.5 percentage points.
“The biggest immediate spill-over would be on countries with the closest trade and financial links to China. In emerging Asia, Taiwan, [South] Korea and Thailand would be hit the hardest,” Fitch said.
“In Taiwan, the slowdown would be in excess of 200 basis points in 2013. Among major advanced economies, Japan would be the most affected, with an 80 basis points slowdown. Eurozone members, the US and UK would be less sensitive to a Chinese hard-landing in 2013,” it said.
Stephen Garrett, a 27-year-old graduate student, always thought he would study in China, but first the country’s restrictive COVID-19 policies made it nearly impossible and now he has other concerns. The cost is one deterrent, but Garrett is more worried about restrictions on academic freedom and the personal risk of being stranded in China. He is not alone. Only about 700 American students are studying at Chinese universities, down from a peak of nearly 25,000 a decade ago, while there are nearly 300,000 Chinese students at US schools. Some young Americans are discouraged from investing their time in China by what they see
MAJOR DROP: CEO Tim Cook, who is visiting Hanoi, pledged the firm was committed to Vietnam after its smartphone shipments declined 9.6% annually in the first quarter Apple Inc yesterday said it would increase spending on suppliers in Vietnam, a key production hub, as CEO Tim Cook arrived in the country for a two-day visit. The iPhone maker announced the news in a statement on its Web site, but gave no details of how much it would spend or where the money would go. Cook is expected to meet programmers, content creators and students during his visit, online newspaper VnExpress reported. The visit comes as US President Joe Biden’s administration seeks to ramp up Vietnam’s role in the global tech supply chain to reduce the US’ dependence on China. Images on
New apartments in Taiwan’s major cities are getting smaller, while old apartments are increasingly occupied by older people, many of whom live alone, government data showed. The phenomenon has to do with sharpening unaffordable property prices and an aging population, property brokers said. Apartments with one bedroom that are two years old or older have gained a noticeable presence in the nation’s six special municipalities as well as Hsinchu county and city in the past five years, Evertrust Rehouse Co (永慶房產集團) found, citing data from the government’s real-price transaction platform. In Taipei, apartments with one bedroom accounted for 19 percent of deals last
US CONSCULTANT: The US Department of Commerce’s Ursula Burns is a rarely seen US government consultant to be put forward to sit on the board, nominated as an independent director Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), the world’s largest contract chipmaker, yesterday nominated 10 candidates for its new board of directors, including Ursula Burns from the US Department of Commerce. It is rare that TSMC has nominated a US government consultant to sit on its board. Burns was nominated as one of seven independent directors. She is vice chair of the department’s Advisory Council on Supply Chain Competitiveness. Burns is to stand for election at TSMC’s annual shareholders’ meeting on June 4 along with the rest of the candidates. TSMC chairman Mark Liu (劉德音) was not on the list after in December last